Blog

The British Columbia Supreme Court considered the circumstances in which moral damages will be awarded in Haftbaradaran v. St. Hubertus Estate Winery Ltd..

The theory that the plaintiff adopted for claiming recovery of moral damages was that the manner of his dismissal caused him to suffer mental distress.

According to the Supreme Court of Canada’s decision in Honda Canada Inc. v. Keays:

Damages resulting from the manner of dismissal must then be available only if they result from the circumstances describe in Wallace, namely where the employer engages in conduct during the course of dismissal that is “unfair or is in bad faith by being, for example, untruthful, misleading or unduly insensitive.”

What kinds of behaviour will attract moral damages?  According to Keays:

… Examples of conduct in dismissal resulting in compensable damages are attacking the employee’s reputation by declarations made at the time of dismissal, misrepresentation regarding the reason for the decision, or dismissal meant to deprive the employee of a pension benefit or other right, permanent status, for instance…

It has been a widely held principle that the “normal distress and hurt feelings resulting from dismissal are not compensable.”

The Court in Haftbaradaran stated:

On the issue of moral damages, the question in this case then becomes whether the defendant’s conduct in the course of the dismissal was unfair or in bad faith? Unfairness in this context must mean something more than the unfairness of the plaintiff wanting and needing his job on one side, and of the defendant having the capacity to keep him on the job but refusing to do so on the other side. The unfairness that is inherent in that power imbalance is present in virtually all employment situations; if that were all that is required to found a claim for moral damages, virtually every firing would be followed by a successful claim for mental upset.

Was the manner of dismissal done in bad faith?  The Court quickly held that it was not following a review of the evidence, including the defendant having sent an email taking the position that the plaintiff had resigned (which was, in the circumstances and as described by the court an “honest mistake”).  The Court found that “bad faith” would follow in the following circumstances:

I have come to that conclusion because the criteria for an award of moral damages have about them a tenor of intentional culpability on the employer’s part. That is to say, for moral damages to flow, the employee must show that the employer effected bad faith by means of an intentional effort to, for example, mislead the employee.  A rough and perhaps not particularly apt analogue of this may be the difference between common garden-variety negligence that lacks the mental element to attract criminal liability and reckless disregard which does have that necessary mental element.

The Court concluded, in dismissing the claim for moral damages, that “the e-mail may not have been an olive branch, but neither was it a baseball bat.”

The circumstances in which moral damages can be successfully claimed and recovered are limited, as one would expect.  This case is just another in a growing line that establishes that “moral damages” are exceptional.